November 3rd, 2008
Auditude could transform entertainment - but it won't
Auditude’s deal with MTV and MySpace (PR) is a huge vote of confidence in a business model that transforms today’s copyright morass into a win-win-win for all involved.
Auditude looks at this huge world of illegal filesharing and sees an untapped resource, just like grid computing sees a bazillion unused PC cycles as a resource. You have this huge, viral content distribution network, with users footing the bill for the servers, processing and bandwidth.
Meanwhile, users have been both sharing content and commoditizing it. Content has become free (except for the still minor risk of being served with an RIAA lawsuit). Apple is happy because, no matter how many iTunes sales they rack up, illegal filesharing is a huge driver for iPod sales, but no one else is. Entertainment companies are clearly miserable and users actually don’t want to live a black market existence.
Auditude’s solution is to simply monetize all that “illegally” shared content. Go ahead and share it, BitTorrent it, whatever. We’ll insert the advertising and the more you share, the more “file views” we’ll serve up for advertisers.
Ultimately, that should mean we can put aside distinctions between legal and illegal distribution. Both create revenue for the publisher. Taken to its logical extreme, one can imagine entertainment content gets developed with no “purchase” model at all. Content gets developed for the advertising market.
Better yet, it provides a business model for alternative producers, who don’t have the marketing or distribution model to make it in the traditional models. For them, piggybacking on P2P distribution is brilliant on the cost side. Now, it provides a revenue stream as well.
And yet … while it’s heartening that MTV and MySpace have signed onto the model, I don’t think Hollywood will take Auditude’s model seriously for some years to come. It’s a question of control. This is about the commoditization of content – big time. Studios want to control the means of distribution. They want to dictate terms to the supply chain. They don’t want distribution to happen from the bottom and they don’t want some tech company to dictate how much money they’ll get.
The record companies don’t like it when Apple controls the terms and the production companies will like it even less when Auditude tries it. To that extent, Larry is right — the devil is in the details. But I don’t think it’s a question of how good the deal is. It’s a question of control.
